8-K: Carlyle Credit Income Fund Announces Strong Fourth Quarter and Full Year 2024 Results, Maintains High Dividend

Carlyle Credit Income Fund reported its fourth quarter and full year 2024 financial results, highlighting a significant increase in the dividend rate and strategic investments in CLO opportunities.

Summary

• Carlyle Credit Income Fund (CCIF) announced its financial results for the fourth quarter and full year ended September 30, 2024.
• The fund has increased its dividend rate from 7.8% to 15.2% since Carlyle became the investment advisor in July 2023.
• CCIF maintained a monthly dividend of 10.5 cents per share through February 2025, which equates to a 15.16% annualized dividend based on the share price as of November 19, 2024, or 16.64% based on the fund's NAV as of October 31, 2024.
• The fund invested $39.6 million in new CLO investments with a weighted average GAAP yield of 16.5%.
• The aggregate portfolio weighted average GAAP yield was 18.6% as of September 30, 2024.
• CCIF completed a private placement of convertible preferred shares for net proceeds of $10.7 million.
• A registered direct placement of common shares at a premium to NAV generated net proceeds of $11.5 million.
• The fund sold 850,000 common shares through an ATM offering program at a premium to NAV for net proceeds of $6.8 million.
• Net investment income was $0.30 per common share, and core net investment income was $0.45 per common share for the fourth quarter of 2024.
• The net asset value per common share was $7.64 as of September 30, 2024.
• The total fair value of investments was $173.5 million as of September 30, 2024.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong dividend growth, successful capital raising, and high-yielding investments. While there are inherent risks, the overall tone is optimistic and indicates a well-managed fund.

Positives

• The fund has significantly increased its dividend rate, providing a higher return for investors.
• The fund has successfully raised capital through various placements, strengthening its financial position.
• The fund's investments in CLOs are generating high yields, contributing to strong performance.
• The fund's portfolio is diversified across 49 unique CLO investments managed by 27 different CLO managers.
• The fund's recurring cash flows of $0.70 per share in Q4 2024 support the dividend payments.

Negatives

• Net realized and unrealized losses were $(0.05) per share in Q4 2024.
• The net asset value per common share decreased slightly from $7.99 at the end of Q1 2024 to $7.64 at the end of Q4 2024.

Risks

• The document contains forward-looking statements that involve substantial risks and uncertainties.
• The fund's performance is subject to market conditions and the performance of its underlying investments.
• There is no guarantee that future dividends will match or exceed historical rates or will be paid at all.
• The fund's investments in CLO equity securities can be complex and may be subject to volatility.

Future Outlook

The fund will continue to seek attractive CLO equity opportunities for shareholders in 2025.

Management Comments

• Lauren Basmadjian, CCIF's Chief Executive Officer, stated that they are pleased with the 4Q and FY results and continue to execute the strategy laid out when they became investment advisor in July 2023.
• Management highlighted the growth in the dividend rate from 7.8% to 15.2% since becoming investment advisor.

Industry Context

This announcement reflects the ongoing interest in CLO investments as a source of high yield in the current market environment. Carlyle's expertise in CLO management positions CCIF to capitalize on these opportunities.

Comparison to Industry Standards

• CCIF's dividend yield of 15.16% is significantly higher than the average dividend yield of many other closed-end funds and BDCs.
• The fund's focus on CLO equity and junior debt tranches is a specialized strategy that can offer higher returns but also carries higher risk compared to funds investing in senior debt.
• The weighted average GAAP yield of 18.6% on the portfolio is competitive within the CLO market, indicating strong investment performance.
• Comparable companies include other closed-end funds and BDCs that invest in CLOs, such as Eagle Point Credit Company (ECC) and Oxford Lane Capital Corp. (OXLC), although their specific strategies and portfolio compositions may differ.

Stakeholder Impact

• Shareholders benefit from the increased dividend rate and the fund's strong performance.
• The fund's employees and management are likely to be positively impacted by the fund's success.
• The fund's investment strategy may impact the broader credit markets and the CLO industry.

Next Steps

• The fund will host a conference call on November 21, 2024, to discuss the fourth quarter financial results.
• The fund will continue to seek attractive CLO equity opportunities in 2025.

Key Dates

Keywords

CLO, dividends, Carlyle Credit Income Fund, investment income, net asset value, preferred shares, common shares, capital raise, financial results, yield